Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- CTL's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for CENTURYLINK INC is rather high; currently it is at 58.70%. Regardless of CTL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.60% trails the industry average.
- CENTURYLINK INC's earnings per share declined by 36.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CENTURYLINK INC reported lower earnings of $1.29 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $1.29).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- Even though the current debt-to-equity ratio is 1.06, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.42 is very low and demonstrates very weak liquidity.
CenturyLink, Inc. operates as an integrated telecommunications company in the United States. The company provides local and long-distance, network access, private line, public access, broadband, data, managed hosting, colocation, wireless, and video services to consumers and businesses. The company has a P/E ratio of 52.5, above the average telecommunications industry P/E ratio of 48.3 and above the S&P 500 P/E ratio of 17.7. CenturyLink has a market cap of $26.1 billion and is part of the
industry. Shares are up 11.6% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.